What craziness to see the stock at 25 only four months ago and 15 today; a -40% drop. The rally higher from the May-June bottom, that Keystone called last year, was from 14 to 25; a +80% gain. Unfortunately, Keystone exited the long trade too son in July-August leaving lots of dough on the table. The negative talk around Twitter last spring was rampant. Even Aunt Agatha, that never speaks ill will against anyone, said that Twitter was a piece of garbage.
The overboard negative sentiment and strong positive divergence, falling wedge, and oversold conditions (all bullish chart indications) made the bottom call easy. There was nothing to it. After the action over the last few months, price is staggering sideways like Uncle Harry after he drinks one too many boilermakers.
Twitter is languishing not knowing whether to believe all the naysayers and doom and gloom and collapse lower, or, dwell on the positive that the popularity of Twitter remains constant and it can be a takeover candidate at anytime by any big tech company. Usually, like last spring, when sentiment is excessively bearish, stock price recovers.
Price sinks last week and the indicators have a weak and bleak profile in the nearer term sans the stochastics. Stoch's are oversold and positively diverged wanting a bounce so TWTR will likely recover, say, this week, but then sink lower again to make a matching or lower low and at that time, say a couple-three weeks out may be a very attractive entry point on the long side. Even now is a good time to nibble on TWTR claiming a beach head where further longs can be brought on and scaled into over time.
TWTR stops at the strong horizontal price support at 15.50-ish. The lower standard deviation band is at 14.75 and rising so this target remains in play; this level jives with price support at 14.60-ish. The prior low last spring at the possie d bottom is 14.00. The positive divergence, falling wedge and oversold conditions were textbook for a launch higher in price, which occurred, and the strength shown by this basing move hints that there is no reason for price to ever come back all the way down again. Can it come back down to 14? Sure it can, anything can happen in markets especially if Twitter releases more bad news. The expectation, however, would be that it would not. Twitter is in a basing pattern perhaps waiting for the morning this year when a big tech company announces plans to take over the tweety bird.
Keystone has TWTR as a long pick in the 2017 Predictions but does not have a position currently. Keystone will buy TWTR this week, then add if it comes down to 14.6-14.8 which probably will occur 2 or 3 weeks out. The general expectation is for Twitter to print another base over the next month and then begin a trek higher again. Twitter, however, is very susceptible to news flow, both good and bad. Dorsey likely wants to sell Twitter for the right price since then he could focus all his attention on Square. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.